An Analysis Of The Sony Corporation

An Analysis Of The Sony CorporationCurrent ActivitiesTo twenty-four hours, the Sony Corporation is a multinational pile up headquartered in Toyko, japan. The come with is bingle of the worlds largest media conglomerates and is one of the leading manufacturers of electronics, video, communication, video games consoles and IT products for the consumer and work foodstuffs. However, Sony is better kn let for its risque quality consumer electronics, which account for 61% of measure revenues. In 2008, the caller had revenues exceeding 7.730.00 Trillion or $78.88. (Rugman, 2009)ProductsModern day Sony is cognize for its innovative products such(prenominal) as the Triniton colour television Bravia in last spirits Definition television Playstation video console VAIO laptop Music energetic phones Walkman and Discman personal stereos.(See accessory B. For a list of Sonys product)Modern Strategy assimilation Industry and Media SynergySony is recognised as a total enjoyment phone r. This means it is no longer simply a manufacturer of scientific hardware plainly is an integral infract of a kindisation perseverance. Sony likes to subscribe to a media synergy.This term was employed to refer to a strategy, adopted by many hardware and software producing companies of attempting to synchronize and actively forge connections amongst directly related technologies and areas of delight. (du Gay, 1997)ProductsFor its speech sound-visual products Sonys strategy boils d deliver to producing audio, visual and electronic gadgets and exacting the heart and soul that goes finished them. For example, Sonys victoryful Playstation 2 games console allows the company to reserve the hardware needful for the firm to capture the games foodstuff. (Rugman, 2009)The strategy reflects Sonys media synergy which came part from an ac be intimateledgment that Sonys Walkman1 was useless without the c pluste that was inserted to it, which was in turn useless without the musi cal arranging artists and the companys Betamax videocassette2 recorder was useless without video-cassettes of burgeon forths and music. (du Gay, 1997)More all over, the outright receiveership of CBS (music), MGM (movies) and Sony BMG (Music) allows the company access the film and movie industry and music artists. These are builds of entertainment which are viewed and listened to via Sonys products. marketTo support the companys commitment to succeeding spherically and brain how business line is performed elsewhere, the company seeks to fit into host country communities. Therefore Sony seeks toHire topical anaestheticly flush a balance between the home culture and local cultureParticipate in the local community.In addition, Sony prefers to list the company on the local stock exchange appoint well respected local executives to the Board of Directors and create a local product scattering remains. (du Gay, 1997) planetaryization HistorySonys entry into foreign markets appea rs to have followed the typical internationalistization exhibit. (See prototype 1.1) The company initially obtained a license from a US company, ships bell Lab, in order to recreate the transistor utilize science in its radio. These products were make growd with success and original introduced to the local lacquerese market. The products were consequently merchandiseed to markets of analogous consuming habits. exporting of these dangerouss occurred via a distri saveors and then some time later through and through the companys own subsidiaries. Factories were then establish in dissimilar markets, where products could be produced closer to the export market and at a cost discount. The final stage of the FDI put to work occurred when Sony embarked upon open up its own RD and trade facilities, enabling lasting market social movement and understanding of foreign markets.The growth of Sony as a company and its technologies occurred inside a process of interaction betwe en the US and lacquer. As the company grew, Sony executives pee-peeed whapledge from unbroken visits to the US, acquired the rights to produce transistors from the US and found that North the States provided a major market for its audio-visual products. The adoption of the stool Sony and the standardization of products such as the Walkman were adopted with the aim of being a global mail (du Gay, 1997)Sony offset embarked upon FDI via a wholly owned marcher in the US in 1960. However, over the last 60 years it has carryd in Joint backs (JVs), Mergers and Acquisitions (MA) and Strategic Alliances. (E.G. Sony-Ericsson, Sony-Microsoft and Sony-Sharpe)Throughout the 1980s two aftermathant developments record how Sony began actively extending its aim as a global corporation. First, the company aimed to interlace in all markets across the world, to r to each one as many cap big businessman consumers as possible. Second, the company aimed to reorganize processes of output in such a way so that they would not be limited to the constraints of the nation state. In such a case, a particular concern was how the effectiveness and international agonisticness of Japanese companies were constrained by the value of the Japanese YEN. This meant that goods produced in Japan were more expensive when exported and in competition with those in separate parts of the world. (du Gay, 1997)To pursue these aims, Sony adopted a strategy of globalisation that involve moving their manufacturing and marketing operations to different locations around the world and set up local operations in different locations around the world. (du Gay, 1997) cardinal of Sonys motives for moving its manufacturing operations was a straight-forward attempt to follow its competitors and reduce aim costs. For example, the starting Walkmans were manufactured and assembled in Japan so that the companys management could be close to operations and make any necessary modifications, once up and run ning and not requiring so many modifications, additional assembly chemical elementies were naturalized in Malaysia and Taiwan. (du Gay, 1997)The gradual move came to move operations so that they could resolve directly to local conditions. For example, Teletext was verit sufficient onsite in the UK and Triniton TV was developed topically in France. (du Gay, 1997)An additional practical consideration was that by establishing and presenting themselves as a local company, Sony could use unlike national and pan regional rules and regulations to contact the most appropriate and cost effective environment to manufacture and produce its products. The company could exploit cheap labour in Malaysia, take avail of grants there were available to attract new electronic industries in the UK. (du Gay, 1997)In the 1980s 1990s, Sony began to rapidly expand into europium. (See Appendix A- history timeline). Sony was vigorous in its international expansion. The company chose to expand into si milar markets, such as US and Europe. These markets had large populations, high incomes per capita and a consumer culture. Therefore, the other two TRIAD regions were good markets to promote and sell Sony products.The companys strategy is to be present in its market of distribution and therefore it constituted a number of factories to develop and look at its products. The objective is to understand the local market and consumer demands. Sony has a strategy of introducing its products scratch to its local market (Japan), testing consumer preferences and then introduces these products to its international markets.The adoption of the name Sony (in 1957) was alike an attempt to communicate the brand and its products to the market. Sony was able to do this over a operative period of time. Sony learnt solidly from technological, productivity and efficiency alterments this was a stimulant for its international trade and the international product life cycle. (Vernon, 1966)Today, Sony has developed a strategy to not only create applied science but to control the content that goes into them. Therefore Sony has embarked upon a number of MAs. First with a 50/50 JV with CBS, which Sony at last bought outright and also a surmisal with capital of South Carolina Tristar Pictures, MGM, BMI and a number of media companies. Sony has also embarked upon JVs with software companies such as Microsoft. The companys strategy is to be present across all levels of the entertainment industry.CASE STUDIESSONY WALKMANWalkman is a trademark of Sony Corporation, used originally to market its prototype of portable audio musicians. In July, 1979, the original Sony Walkman portable music player the TPS L2 was introduced. Sony promoted the concept of enjoying music, anywhere, anytime using industry advertisements featuring celebrities with the product. The first Walkman was marketed under the Walkman brand in Japan, but in other markets it was originally sold under various names inc luding Soundabout (USA), Stowaway (UK) and Freestyle in Australia. Walkman players become rattling popular in Japan and foreign tourists visiting Japan who bought them as souvenirs, this prompted Sony to standardise the name to Walkman worldwide (Uggla and Verick, 2008)SONY-ERICSSONSony Ericcson was established as a 50/50 Joint Venture in 2001 by Sony and Ericsson (a fluid communications infrastructure and systems business establish in Sweden) Sony Ericsson functions as a separate entity designing, producing and marketing cellular phones and accessories. It had revenues of 13 billion euros in 2007, from the scale of 100 million units which is a global market dispense of 9%. (Uggla and Verick, 2008)Sony Ericsson had recognised a segment for employ music phones various MP-3 enabled handsets were on the market but there was forgetful differentiation among them. Sony Ericsson decided to investigate and launch a music phone. The company decided to incorporate Walkman into the music phone branding. Sony established that Walkman branding further around 67% of people to buy the phone by adding credibleness to the music player. (Uggla and Verick, 2008) transnationalisation TheoriesThe following trade theories are applicable to Sonys process when entering new marketsDunnings Eclectic Paradigm of InternationalisationSony was able to successfully expand abroad collectible to its firm particularised and intellectual warring values. Furthermore, the company had successfully established itself in its home market and generating adapted expertness to export its high-tech consumer electronics abroad.FSA Sony possesses FSAs through the development of intellectual capital. In addition, the Sony brand names (e.g. Walkman, Playstation, Triniton, Bravia) carry significant worldwide consumer value ascribable to superior FSAs over both domestic and international rivals Sony was able to operate in FDI. Amongst other things Sonys first FSA was it transistor technology. Th rough this, Sony was able to tick off itself from its rivals. It was able to provide high tech, desirable products.Sonys FSA also came from its personnel. The companys co-owners (a Physicist and an Engineer), managers and other employees were of high quality, possessed a high degree of technical know-how and desire to improve the companys industry position. internalisation Sony possesses know-how and competitive advantage through the development of its products first at home and then applying this knowledge to foreign markets such as the USA and the Europe. As previously mentioned Sony was able to acquire foreign technology. The technology licence provided access to the transistor and allowed Sony to agnise foreign technological know-how. gibe to Dunnings Eclectic paradigm Sonys strategy allowed the firm to acquire an intangible asset (transistor technology) apply this technology to its products, and then create a firm specific advantage. The intangible asset provided Sony with a n exclusive piece of know-how that was specific to the firm.CSA Sony embarked upon FDI through the cut-rate sale of its products not only in its home market but also in the US, Europe and eventually the rest of the world. For example, once the transistor had been applied to its radio, Sony sold this item in markets with similar tastes and income per capita. For example, after introducing the TR-55 radio to Japan in 1955, Sony then exported and sold its radios in the US and next Europe in 1957.This could not have occurred without the existence of consumer demand. Sony also took advantage of well-situated industry subsidies and national legislation, which support the presence of high tech industries for example, the opening of Bridgend Factory in Wales.According to the eclectic paradigm, all three of the conditions necessary for FDI were present when Sony started its internationalisation process. Sony sought to annex its internalisation advantages and reduce execution costs, thro ugh the purchase and development of new technology and reduce motion costs through the establishment of its own subsidiary and grind. Sonys actions increased its firm-specific advantages, through know-how and innovation. The company internalised and possessed an advantage over its rivals by retaining the technological know-how, quite a than licence it to its competitors. Sony reduced the risk and threats from competitors by retaining its knowledge.DistributionSonys Initial finis to export its products via a distributor illustrates that company saw value in having a presence within the US market, but the company lacked significant knowledge of the market to justify distributing the products itself. Moreover, it was profitable to export products to the US as there was an abundance of wealth, the US consumer culture, and retail distribution networks. However, trade barriers, import taxes and unfavourable distribution contracts eventually led Sony to establish a subsidiary within th e US market.Overseas Production MalaysiaFurthermore, Sony eventually located part of its intersection process to Malaysia. This occurred once the company was satisfied with its local and international products. This also occurred in order to offset the rising costs in the home market, Japan. Sony was able to engage in FDI to Malaysia as the company had generating ample amounts of FSAs and ISAs.Uppsala Internationalisation Process ModelPart of Sonys business strategy is known as localisation, which is the commitment to gaining market knowledge, cultural understanding and business expertise. Sony has initially licensed its transistor know-how from the US, it was decided that the company should also introduce its products to this market. The Uppsala sample can therefore be applied to Sonys internationalisation process.When Sony first entered the US and Europe markets, the company knew little about local consumer demand. The attractions were solely the amend populations, high incom es per capita, government trade measures and distribution networks. In addition, Sony believed that consumers in these markets were similar to those in Japan.When Sony Executive visited the US and Europe, they collected data collection and canvas local consumer demand, at this point it was decided to export products to these locations. Sony then connected itself to further to the US and then Europe, through the establishment of its foreign subsidiaries, Sony the States and Sony Corporation S.A. in 1960. The establishment of these subsidiaries resulted in further FDI, through distribution systems, marketing campaigns and listing on the local Stock Exchange.Sony was able to quash some of its foreign company disadvantage as its held a constant presence within the local markets. The company committed itself to understanding how consumers stand and their reactions to new products. Sony was eventually able to engage in FDI as it gained significant knowhow, from exporting, distributing and establishing its own subsidiary, reducing transaction costs. Sony also used its current in operation(p) model and consumer tastes to establish itself in markets which it believed to be similar its own.For example, when Sony introduced its VAIO laptop to the US, the charge and high technical specifications unlike Japan, were not popular with US consumers. Sony eventually modified its laptops to US consumer tastes. This led to a reduction in hurt and operating features which US consumers preferred.Joint Ventures (JVs) and PartnershipsSonys JVs, collaborationistships, mergers and attainments can be understood through the application of the Uppsala business modelThe JV with Ericsson allows the company to gain a first mover advantage from standard setting in the mobile telecommunication industry. Also, the JV allows instant access to the European consumer markets. The company seeks to gain an understanding of these distinct markets but does not have the time and know how. The J V establishes instant knowledge, with reduced acquisition times, creating instant presence and expertise within these markets.Hymerian Theory noncompetitive Advantage TheorySonys issuance of ADRs in the early 1960s can be understood through the Hymers surmisal of Monopolistic Advantage, Market Power approach and Product and Factor market imperfections.Sony was able to exploit market imperfections as it could conquer threats from local firms due its ownership advantages (superior technological know-how, economies of scale at home) and other internalised advantages (managerial bring forth, product developments, animated supply chains, cost advantages). This allowed Sony to obtain favourable political ties, market connections and social positioning despite the fact Sony was a foreign firm. It was therefore good for local Americans to take an equity position within such a rapidly emerging company.Moreover, Sony was operating in an oligopolistic market, according to Hymers theory of Monopolistic Advantage FDI takes place in such markets or industries rather than markets or industries operating under near perfect competition. Markets imperfections, allowed Sony to obtain global competitive advantage. Companys which offer investors consistently high rates of return, due to good products and consumer trustfulness is attractive to investors. Further enthronisation into Sony, allows it to maintain its position of technological superiority.In addition, Sonys technological expertise meant that its products were attractive not only in Japan but throughout the rest of the world. But, Sony initially lacked knowledge in marketing and distribution and so initially used a distributor partner to export its products. This eventually changed when Sony acquired its own distribution system.For example, when Sony first introduced the Walkman in 1979, it did so in its home market first and followed this by introducing it under different brand names, Soundabout (USA) Stowaway (UK) and Freestyle in Australia (Uggla and Verick, 200) The company eventually standardised the Walkman name in the early 1980s. The adoption of the name was to communicate the brand and its products to the market. Sony was able to do this over time and learnt from technology and efficiency improvement which its applied it each of its markets.Product and Factor Market ImperfectionsSony embarked upon FDI as it understood it was able to overcome threats from local firms.Sonys strategy is to understand its consumers locally. The company therefore engages in RD and production in most of its subsidiary locations or within close proximity. This is so that it understands consumer tastes and local demand. This strategy can be explained using Caves, Product and factor imperfection.Sony is a market leader and so has superior technological experience and finance to establish local RD and production facilities to understand and satisfy consumer sensibilities. This provided an advantage as the c ompany could combine its know-how, to create products that rival indigenous firms.Internalisation TheoryThis applies to Sony as the company chose to enter the US under its own brand name as opposed to developing the technology and then selling it on to another company. It retained the knowledge, applied it to its new markets and gained an understanding of consumers in these locations. The company also established subsidiaries as opposed to export via distributors.Market Power ApproachThis theory applies to Sony through the number of mergers and acquisition the company has engaged in over the last 30 years.Sony has embarked upon a number of mergers and acquisitions throughout its history. The companys strategy is to own not only the content of its technology but also the means by which this technology is used. This has encouraged Sony to acquire music, film, and gaming companies, in order to better understand its consumers but also dictate the market. For example, the company has inc reased its power by being dominant within consumer electronics both nationally and internationally.In 2001, the 50 /50 Joint venture with Ericsson (a mobile communicate infrastructure and systems business establish in Sweden) created a separate entity whereby Sony designs, produces and markets cellular phones and accessories. In 2007, the company had revenues of 13 billion, from the sale of 100 million units which is a global market share of 9%. (Uggla and Verick, 2007)The partnership between these two firms establishes the argument that international production is conducted between industrialized countries and their companies. Moreover, this partnership was established so that both companies could gain a competitive advantage over domestic and international rivals. The ability of both companies to exploit the know-how of the partner and move into new industries can be understood through the market power approach. Sony is now active in the global mobile telecommunications industry. This has allowed it to internalise its know how further, and provided instant market presence within a new industry and new international markets. enunciate Count 3,419Figure 1.1 Internationalisation ProcessFigure 1.1 Entry into foreign markets the internationalisation process ( witness Rugman, 2009)SWOT AnalysisSTRENGTHSWEAKNESSESSony is a large corporation, it is able to concentrate and dedicate manpower to product quality, RD, marketing, distribution, etc.The company has very few time and financial constraints.Brand names and company know howInternal managementKey products e.g., Sony PlaystationSony designs, manufactures and sells its own products.Sonys return on investment has been low because of the large amount of capital dedicated to its factories. Sonys Return on Equity is typically around 5%, this could be higher.Large menOPPORTUNITIESTHREATSFocus on BRIC and emerging economiesContinue seeking diverse JVs with industry leading companies e.g., Sony EricssonContinue to d evelop and improve key consumer electronics, TV, computers, MP3 and wireless technology new-fashioned growth areas Mobile phone internet technologyOutsourced manufacturing to increase Return on EquityLarge Organisation Must proceed streamlineEconomic slowdownInterest rate differentialsFlat sales, move profit marginsLate comer to key electronic sectors, such as flat-screen TVs and digital videodisc recorders.AppendicesAppendix A. TimelineIn 1952 Totsuko (Sony) launched a successful tape-recorder businessIn 1955 Totsuko adopted the name Sony, it was believed that the name had not only worldwide appeal but also easy to pronounce. The company also launched its first Transistor Radio the TR-55 in this same year.In 1955, Sony enters into an agreement with Delmonico International to distribute it products within the US. In December, 1958 Sony launched its pocket sized radio the TR-63 to the US market.In January 1958, Sony is listed on the Tokyo Stock Exchange. In 1959, Sony decides t o distribute its own products. (To protect its brand name)The assembly established Sony America and Sony Overseas S.A. established near Zurich, Switzerland, in 1960. The group launched the worlds first direct-view portable TV, the TV8-301. (Datamonitor, 2008)In 1961, the group was the first Japanese company to offer shares in the US, in the form of American Depository Receipts (ADRs) on the OTC market of the raw York Stock Exchange. In the following year, the group launched the worlds smallest and lightest transistor TV, TV5-303. (Datamonitor, 2008)In 1968, Sony (UK) Ltd. was established in the UK (later recognised as Sony UK Ltd., in 1993). The CBS/ SONY Records Inc. a 50 50 JV with CBS Inc of the US was also established this year.In 1970, Sonys shares were listed on the New York Stock Exchange. In 1971, Sony launched 3/4 -inch u-matic colour video cassette recorder. (Datamonitor, 2008)A factory was established in San Diego, California, in 1972, followed by a factory in Bridgend , Wales in 1974, which served both the UK and Europe. The Betamax VCR, the SL-6300, the worlds first home -use video system was introduced in 1975. (Datamonitor, 2008)In 1979, Sony Prudential Life insurance Co. Ltd, the 50-50 joint venture with Prudential Insurance Co. Of America, was established. (Datamonitor, 2008)In 1979, Sony launched the Walkman, the 3.5 inch micro floppy magnetic disk drive in 1981 the worlds first CD player in 1982 the first consumer camcorder in 1983 8mm video in 1988 and the first digital VTR in 1985. (Datamonitor, 2008)In 1988, the group bought CBS Record to form Sony Music Entertainment, and in 1989, the company purchased Columbia pictures, forming Sony Pictures Entertainment Inc., in 1991. (Datamonitor, 2008) In 1990, Sony acquires 12 business including CBS records INC and Columbia Tristar Pictures.In 1993, Sony Computer Entertainment Inc, was established, during the same time Sony launched the VAIO a home-se PC series. (Datamonitor, 2008)In 2001, the g roup established Sony Bank in Japan and Sony Ericsson Mobile Communications. (Datamonitor, 2008)In 2001, Sony Ericsson Mobile Communications establishedIn 2002, Sony absorbs Aiwa (a form Japanese audio visual manufacturer) via mergerIn 2003, Sony launched the worlds first next generation high capacity optical Blu-ray Disc recorder BDZ-S77. (Datamonitor, 2008)In 2004, Sony established a music distribution company, Sony BMG Music Entertainment. (Datamonitor, 2008)In 2005, Sony completed the acquisition of Metro-Goldwyn-Mayer (MGM), one of the worlds largest privately held, independent motion picture, television and home video companies. (Datamonitor, 2008)In 2009, the Sony decided to form a joint venture (JV) with Sharp Corporation. The JV which will be established in March 2010, will engage in the manufacturing and sales of liquid vitreous silica panel and liquid crystal module. (Datamonitor, 2008)Appendix B. Sonys Main BrandsNameType of productBraviaVisualCybershot recallDiscmanA udioPlaystation (23)Games ConsoleTrintonVisualWalkmanAudioSource Datamonitor Sony CorporationAppendix C. Sonys Main CompetitorsSource Datamonitor Sony CorporationAppendix D. Sonys Business ActivitiesSony operates through 5 segments 1.Electronic, 2.Games, 3.Finance, 4.Pictures and 5. OthersSource Datamonitor Sony CorporationSource Datamonitor Sony CorporationSource Datamonitor Sony CorporationSource Datamonitor Sony CorporationSource Datamonitor Sony CorporationAppendix E. Sony ProductsSource Datamonitor Sony Corporation